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Gree Electric Appliances, China’s largest air conditioner maker, which is facing a potential hostile takeover from insurance conglomerate Baoneng Group, continued to be the top draw for foreign funds in the Shenzhen-Hong Kong stock connect.

The company’s shares gained 1.74 per cent to close at 26.33 yuan (HK$29.7) in Shenzhen, after plummeting to the 10 per cent daily limit on Monday amid speculation that Beijing would thwart Baoneng’s takeover attempt.

The Zhuhai-based white goods maker became the “favourite” Shenzhen-listed stock for foreign investors buying through the new stock connect and recorded northbound money inflows amounting to over 240 million yuan yesterday, according to the Hong Kong stock exchange.

Last Wednesday, Gree said Baoneng had become its third biggest shareholder with a 4.13 per cent stake. Baoneng had bought the shares between November 17 and 28, according to regulatory filings.

Dong Mingzhu, a well-known Chinese businesswoman and chief executive of Gree, reassured the public on Monday that the state-owned firm’s operation would not be affected by the capital market chaos.

“Gree, as a manufacturer, will leave itself untouched by the movements in capital markets,”Dong’s official social media account quoted her as saying. “If [ financial market players ] disrupt the operation of home-grown manufacturers, they will descend into sinners.”

Her remarks came after Beijing bared its teeth to punish so-called “Vanke raider” Baoneng. On Monday evening, the insurance regulator suspended Baoneng’s unit from selling some products followed scathing comments by China’s securities regulator over the weekend on “barbaric” share acquisitions by unidentified asset managers.

The Shenzhen bourse has also issued a release vowing to “intensely monitor” market transactions regarding companies likely to fall prey to takeover deals, including Gree and Vanke.

Low-key Baoneng has been at the centre of China’s highest profile corporate tussle that saw the insurer – as the largest shareholder – battle top management for control of property giant Vanke.

The long-running Vanke saga has put top officials of other blue-chips in a tizzy. Market concerns over Gree becoming the latest audacious target of Baoneng heightened after the insurer’s stake purchase.

“We have no intention to have a hand in the daily operation of Gree,” Baoneng defended itself in a statement last week. But obviously the statement has not convinced the markets.

Analysts from research houses including CICC and China Merchant Securities said last week that Gree’s valuation would get a boost from Baoneng’s potential takeover bid, as the insurer is making its move for financial gains.

Earlier last month, state-run Gree Group removed its iconic chairwoman Dong but retained her as the head of its listed unit. Dong generated an outcry after she launched a tirade towards shareholders at a meeting for rejecting the proposed acquisition of an electric carmaker.